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2014 (8) TMI 760 - AT - Income TaxStatus of assessee Co-operative society or not type of co-operative societies not specified - Eligibility for deduction u/s 80P(2)(a)(i) Held that:- If a co-operative society is engaged in carrying on these activities/facilities for the persons other than its members, the co-operative society, will not be eligible for deduction u/s 80P(2)(a)(i) on the income which it derives from carrying on the activities not relating to its members - where a co-operative society is engaged in carrying on business of banking facilities to its members and to the public or providing credit facilities to its members or to the public, the income which relates to the business of banking facilities to its members or providing credit facilities to its members will only be eligible for deduction u/s 80P(2)(a)(i) - There is no prohibition u/s 80P not to allow deduction to co-operative societies in respect of business relating to its members. The deposits accepted are used by the Assessee co-operative society for lending or investment - Even out of the deposits so received, the loans have been given to the members of the society in accordance with the objects Thus it cannot be said that the Assessee society was carrying on banking business as it was not accepting deposits from the persons who were not members - it is not necessary that the co-operative society should have a banking licence as per the definition under the Income Tax Act it has to be seen as to whether the nature of the business carrying on by the assessee is a banking business or not - the paid up share capital and reserves in the case of the Assessee is more than ₹ 1 lac also, Sec. 20 of The Karnataka Souharda Sahakari Act, 1997 permits admission of any other co-operative society as a member - in case the rules and bye-laws of the other co-operative society provides otherwise, the co-operative society may not be admitted as a member of the co-operative society - the assessee society cannot be regarded to be a primary co-operative bank as all the three conditions are not complied with and it is not a co-operative bank and the assessee is not hit by the provision of section 80P(4) and asessee is entitled for deduction u/s 80P(2)(a)(i) - the order of the CIT(A) is upheld and the AO is directed to allow deduction to the assessee u/s 80P(2)(a)(i) on the income generated for providing banking or credit facilities to its members Decided against Revenue.
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